California Energy Crisis

Paper Summary:

This paper looks at the causes of the California energy crisis that occurred in 2000-2001 following the deregulation of the state's electrical utilities. The paper discusses the arguments cited in favor of deregulation, what the deregulation entailed for the electrical utilities, and what this meant in terms of the major heat wave that hit in the summer of 2000. Also discussed is the flawed reasoning behind the arguments for deregulation, which ultimately caused the bankruptcy of the California electrical utilities.

From the Paper:

"The California Public Utility Commission (CPUC) which used to set the consumer electricity rates in the state, itself declared the system of energy regulation in California as "fragmented, outdated, arcane and unjustifiably complex," and opened the state's electricity industry to competition in December 1995. After the unanimous passing of the deregulation legislation by both houses of the state, it was signed into law by the Governor in September 1996. California thus became the first state in the U.S. to deregulate its electricity industry. The three major Californian utilities, Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric are said to have spent $4.3 million on lobbyists and $1 million on political campaigns in their efforts to encourage deregulation."

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